White House Releases Impact Report on Sequestration Cuts

The White House released a report providing an outline of sequestration cuts scheduled to begin January 2013 as part of the Budget Control Act. Although the report from the Office of Management and Budget was criticized by Republicans for lacking the necessary details to give government contractors the guidance they need in determining how it will impact their bottom lines, the report did provide an overview of projected cuts to discretionary, non-discretionary and defense program spending.

The Budget Control Act, which was agreed to last summer as part of a deal between Republicans and President Obama to raise the debt ceiling, requires the administration to cut $54.7 billion from defense spending and $54.7 from non-defense discretionary spending starting Jan. 2, 2013. This translates into a 9.4 percent cut in defense discretionary spending, 8.2 percent in nondefense discretionary spending, 2 percent from Medicare and 7.6 percent from other non-defense mandatory spending.

Of concern to AGA and gastroenterology, HHS, which funds the majority of public health programs, will experience the largest cut from sequestration — NIH is projected to receive a $2.5 billion cut, FDA is slated for a $318 million cut and CDC is projected for a $490 million cut. Medicare providers will also be subject to a 2 percent cut, which will be on top of the projected 27 percent cut that physicians will get unless Congress intervenes to prevent it.

Sequestration is the result of the congressional “super committee’s” inability to craft a plan that would have achieved the same amount in savings as the sequester. However, both Democrats and Republicans have been arguing against implementing the cuts with Republicans arguing the impact of defense cuts on national security and jobs, and Democrats arguing the impact of the cuts to discretionary spending on our delicate economy. What to do about sequestration and how to address it will play out in the anticipated post-election lame duck session and the election’s outcome will determine its fate.

The lame duck session potentially could be a very busy period given that Congress must address sequestration, the expiring Bush tax cuts, unemployment insurance, payroll taxes and Medicare physician payment cuts. The party controlling the White House and the Senate will determine how motivated each side is to make a deal on many of these issues.

AGA will continue to monitor these critical issues and potential cuts to important programs for gastroenterology. Stay tuned for more updates and advocacy alerts on ways to stay involved in this process.